THE BOURSE WHISPERER: Phoenix Gold (ASX: PXG) has raised approximately $7.8 million having issued 60 million fully paid ordinary shares in the company at an issue price of 13 cents per Share to institutional investors.
Phoenix explained the placement has positioned it to commence it staged development plan for the company’s Castle Hill project in Western Australia.
Project location, Phoenix tenements third party mill locations. Source: Company announcement
The company has commissioned a drilling program to undertake grade control and mine extension drilling, which it expects will provide further geological confidence prior to the commencement of mining.
Phoenix said its mining approvals process is well advanced with contract discussions with mining and haulage contractors in progress.
Commencement of mining is expected in the September Quarter.
The company indicated it is in advanced negotiations with a local third party milling provider, outling the proposed terms of the agreement to potentially include:
600,000 to 800,000 tonnes per annum will be treated for a period of 2 (two) years;
Phoenix ore will be processed in campaigns with no third party blending;
Payment will be on an open book, cost plus basis; and
The mill is to be operated under technical direction of Phoenix.
The company said it was confident the negotiations will result in the execution of a long term Milling Agreement, however, at this stage no assurances can be made that this will occur.
If a Milling Agreement is not executed with this particular third party provider, Phoenix said it has a number of options available with other processing facilities in the vicinity of its projects.
“The completion of the Placement enables us to execute on the base case development plan and finalise the third party milling agreement and commence continuous mining,” Phoenix Gold managing director Jon Price said in the company’s announcement to the Australian Securities Exchange.
“This is a very exciting phase in the company’s evolution as we transition the business from explorer to producer through 2014.”